Delays are starting to chip away at the long-term economic benefits of Georgia Power’s nuclear expansion project, according to a report prepared for state utility regulators.
Regulatory issues, commercial disputes and heightened scrutiny of the $14 billion Plant Vogtle project may push the reactors’ operational dates as much as a year behind schedule. The longer it takes to build the reactors, the more financing and capital costs customers have to pay, diminishing long term economic benefits, the report said.
“Staff has warned on numerous occasions that the benefits will be eroded if delays occur, which is now the case,” wrote Philip Hayet, a consultant hired by the Public Service Commission’s advocacy staff to review Georgia Power’s economic analysis of Plant Vogtle.
The utility’s share of the project is $6.1 billion, and customers already are paying financing costs in their monthly bills.
The PSC will review Hayet’s report and hear from the project’s independent watchdog at a hearing Tuesday.
The report acknowledges that the addition of two reactors at the plant near Augusta still will produce economic benefits of some $3.5 billion over 60 years, including lower operating costs that could hold down customer bills.
But it disputes Georgia Power’s forecast for about $5 billion in benefits.
“Staff believes this figure is misleading and requires further clarification,” Hayet wrote in his testimony on behalf of the PSC staff.
The two reactors are the first in the United States to be built from scratch in 30 years, and the project has faced layers of scrutiny from federal safey regulators, investors and consumer and environmental groups. The PSC reviews and must approve the cost and schedule for the project every six months.
The first reactor was originally scheduled to start producing power in the spring of 2016 and the second one a year later. The project has slipped at least seven months behind schedule but could be delayed as much as a year, an independent project monitor has said.
Georgia Power executives acknowledge there are delays but have told the PSC they are shorter than 12 months.
PSC chairman Tim Echols declined comment on the report’s specifics Monday but said the commission will consider it.
“We take our job of approving the expenses for the plant very seriously,” he said, “and I know we will be asking many questions at the upcoming hearing regarding the issues our construction monitors have raised.”
An executive at Atlanta-based Southern Co., Georgia Power’s parent, said even with scheduling delays, customers will benefit from the project when compared to building a natural gas plant. Nuclear plants cost less to operate and their fuel is less expensive and isn’t as subject to wild price swings, making customer bills more stable over the 60-year lifespan of the reactors.
“You have both parties agreeing that this is economic to continue,” said Buzz Miller, Southern’s executive vice president of nuclear development. “Overall, there’s value.”
In addition to lower long-term fuel costs, the utility has touted long-term benefits to customers because of federal loan guarantees, production tax credits and low interest rates. The company also says customers will save more than $300 million by paying down the project’s financing costs early. The controversial nuclear fee on customer bills started at $3.88 a month in 2011 and will increase to $8.74 a month by 2015.
The project has been hit by delays, some of which have led to commercial disputes and lawsuits. It took longer than expected for federal safety regulators to sign off on the reactor design, which held up getting the license to start major construction on the project. Design changes in structural modules, parts of the reactor that are built elsewhere and then assembled at Vogtle’s construction site, also have led to delays.
The next milestone, placement of concrete for the reactors’ foundations, is expected in January, several months after the original date.
Miller is aware of the scrutiny over the project’s costs and schedule.
“The focus here is to get it right,” he said. “We have enough controls on costs, we know this facility is going to be a huge value long after (we are) on the face of the Earth.”
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